Published on 2013/09/06

Gainful Employment Rule Redrafted

The redrafted gainful employment regulation was released last Friday by the United States Department of Education.

Negotiations are expected to commence next week and once finalized, the redrafted regulation could become applicable to over 11,000 programs at various non-profit and for-profit institutions.

The new rules are stricter than the previously drafted version, which was blocked by a judge in July 2012, and may spark some heated debate from institutions. The previous rules called for cutting federal aid to programs where a limited number of students were paying back their loans or where debt-to-earnings ratios for graduates were considered too high. The new rules now exclude loan-repayment as a criterion, but include programs with as little as 10 students enrolled, compared to the previous version that only counted career-oriented programs with 30 or more students.

The redrafted regulation now proposes that the debt-to-earning calculation be based specifically on students who receive Pell Grants and federal loans. The previous version included all students who complete their program, regardless of how they paid.

After negotiations in September conclude, a second session regarding the amendments to the gainful employment regulation will begin at the end of October.

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